Netanyahu tries to soothe a rift with Biden as he plans to send a government delegation to Washington after earlier cancelling the trip
It was the third straight positive quarter for the world's second-largest economy, which is gradually recovering from a series of slumps since the 1990s. Growth was also much faster than the initial estimate of 3.3 percent.
Gross domestic product (GDP) grew by 1.0 percent in the three months to March from the previous quarter, up from a preliminary reading of 0.8 percent, according to the Cabinet Office.
The upgrade was mainly due to higher-than-expected investment by companies in new equipment and factories, with corporate capital spending up 0.2 percent from the previous quarter, against an initial estimate of a 0.9 percent drop.
Consumer spending grew 0.8 percent, housing investment jumped 4.6 percent and exports expanded 4.0 percent.
But many analysts warn that a slowdown is inevitable in the second quarter of 2008 as the global economic climate chills due to the economic problems in the United States sparked by a housing slump and a related credit crunch.
‘The data confirmed risk factors going forward,’ said Hideki Matsumura, economist at Japan Research Institute, pointing to the return of inflation due to soaring energy and raw material import costs.
‘Companies have not been able to pass on the rising cost to consumers. We are cautious about the outlook,’ he said.
Business investment and brisk exports have been key pillars of the economic recovery.
But now US-bound exports are declining while rising oil prices and a stronger yen are pressuring company earnings, making corporate Japan more cautious about investing aggressively in new facilities.
Hopes for sustained economic growth are thin with the continued rise of crude oil prices, Matsumura said.
‘Downward pressure on the domestic economy will continue,’ he said.
Underscoring the tough external environment, Japan's current account surplus shrank for a second straight month in April as soaring oil prices inflated the value of imports and US-bound exports continued to fall.
Asia's largest economy saw a 29.6 percent drop in its surplus in the current account, the broadest measure of trade in goods and services, to 1.38 trillion yen (12.9 billion dollars), the finance ministry said.
But other analysts said there were reasons to be optimistic that the US economy would recover in 2009, pulling up the Japanese economy with it.
‘We expect Japanese growth to stay flat for the rest of the year. If the US economy recovers as expected in the next year, we believe it should spur growth in Japanese exports,’ said Mitsumaru Kumagai, economist at Daiwa Research Institute.
‘We do not see significant risks for the Chinese economy. That should also buoy Japanese exports, the main driver of the Japanese economy,’ he added.
Despite the first-quarter growth, most analysts believe that Japan's central bank is unlikely to raise its super-low interest rates any time soon given the uncertain outlook for the global economy.
The central bank has kept its key rate at 0.5 percent, the lowest among major economies, since February 2007.
Netanyahu tries to soothe a rift with Biden as he plans to send a government delegation to Washington after earlier cancelling the trip
Among the 24 horses Japan has sent to Dubai is impressive Riyadh Dirt Sprint winner Remake who eyes a Middle East double
Liberty Island looks the horse to beat in the $6m Sheema Classic while Lord North chases history in the $5m Dubai Turf
MBRGI expanded its social and aid programmes to cover 105 countries - five more than in 2022
The Jebel Ali Stables handler leads the Zabeel Stables boss by two wins with three race meetings remaining for the 2023-2024 season
Exciting UAE trio among twelve elite dirt specialist who will vie for glory in the $12 million contest
The attack was planned by the group, who armed themselves with weapons and used a level of violence that can only suggest they intended to kill him
Fallen crypto hero offers apology to his former FTX colleagues